Crude Oil rallies as OPEC+ cuts output; Trend reversal unlikely hint charts

On Monday, the MCX Crude Oil futures were seen trading above the 100-DMA for the first time in more than six months. Sustained trade above Rs 6,350 can help the trend turn favourable for Crude Oil.

The MCX Crude Oil futures have surged over 17 per cent in the last ten trading sessions, as prices pulled-back sharply from oversold zone. The OPEC+ surprise output cut adds fuel to the rally in the short-term, but longer-term trend remains negative as Crude Oil futures trades below key moving averages.

Here's how Crude Oil and Natural Gas futures are placed on the charts.

MCX Crude Oil

Bias: Negative

Last close: Rs 6,199

Resistance: Rs 6,600

Support: Rs 5,990

The MCX Crude Oil futures have rallied sharply from its recent low of Rs 5,290 hit on March 20. Crude Oil prices surged as much as 17.5 per cent in the last 10 trading sessions of FY23, in spite of which the energy-based commodity ended the financial year with a 20.2 per cent loss.

However, OPEC+ surprise move to cut output by an additional 1.16 million barrels per day (bpd) could help the energy-based commodity recoup further lost ground in the near term. The OPEC+ ministerial panel, which includes Saudi Arabia and Russia, was expected to stick to 2 million bpd of cuts already in place until the end of 2023. 

Post the surprise output cut, Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024. READ MORE

Back home, the current rally seems to be a more of a pullback rally from oversold zone. However, if Crude Oil futures manage to conquer and sustain above the key moving averages in the next few trading sessions, the bias could turn favourable.

With Monday's significant gap-up, Crude Oil futures were seen trading above the 100-DMA (Daily Moving Average) for the first time in more than six months near about Rs 6,600. The 100-DMA stands at Rs 6,340. Overall, the price-to-moving averages action is negative for Crude Oil as the 100-DMA stands higher compared to the 50- and 20-DMAs at Rs 6,245 and Rs 5,990, respectively.

However, sustained trade above Rs 6,340 can help the price-to-moving averages bias turn favourable. On the upside, the focus will be on the resistance at the higher-end of the Bollinger Bands at Rs 6,590, and the 200-DMA at Rs 6,850. As long as Crude Oil futures trades below the 200-DMA, the overall bias will continue to remain bearish.

Meanwhile, the weekly charts indicate that if Crude Oil futures are able to conquer the Rs 6,600-level on a weekly closing basis, the commodity could rally towards the Rs 7,100 level - i.e. 50-WMA (Weekly Moving Average).

According to the weekly Fibonacci chart, the MCX Crude Oil May futures has started trade above the week above the R3 pivot, placed at Rs 6,510. The bias is likely to favour the bulls, as long as the energy-based commodity holds this level. On the upside, Crude Oil futures could rally towards the monthly upside pivot points placed at Rs 6,690 - Rs 6,845 - Rs 7,000. On the other hand, violation of Rs 6,510 could trigger a dip towards Rs 6,450 - Rs 6,395 - Rs 6,310.

MCX Natural Gas

Bias: Negative

Last close: Rs 183.80

Target: Rs 140

Support: Rs 165

Resistance: Rs 201; Rs 230

The MCX Natural Gas futures continue to languish at lower levels reeling under the key moving averages. The Bollinger Bands suggest a trading band of Rs 163 - Rs 223 for Natural Gas. The commodity may seek support around its recent low, which also coincides with the lower-end of the Bollinger Bands on the daily chart at Rs 163-odd level.

Break and sustained trade below the same could trigger a fall towards Rs 140-odd level. On the upside, the commodity needs to conquer the near resistance at 20-DMA and 50-DMA at Rs 192 and Rs 206, respectively. 

Among the key momentum oscillators, the weekly MACD (Moving Average Convergence-Divergence) is on the verge of convergence. A positive divergence thereafter could trigger a counter rally for Natural Gas. The next couple of weeks could be giving us a clearer picture.

As per the weekly Fibonacci chart, the S3 pivot is placed at Rs 171.30 which is a crucial support for the week. 

Meanwhile, the monthly Fibonacci charts indicate a trading band of Rs 134 - Rs 234 for the month. On the downside, the commodity is expected to seek support around Rs 166 - Rs 153 - Rs 143; whereas on the upside Natural Gas futures could face resistance around Rs 201 - Rs 215 - Rs 224 in month of May.